Now, suppose First Main Street Bank loans out all of its new excess reserves to Latasha, who immediately uses the funds to write a check to Jake. Jake deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Tim, who writes a check to Rosa, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new excess reserves to Alyssa in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Increase in Deposits Increase in Required Reserves Increase in Loans (Dollars) (Dollars) (Dollars) First Main Street Bank Second Republic Bank Third Fidelity Bank Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $500,000 injection into the money supply results in an overall increase of in demand deposits.
Now, suppose First Main Street Bank loans out all of its new excess reserves to Latasha, who immediately uses the funds to write a check to Jake. Jake deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Tim, who writes a check to Rosa, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new excess reserves to Alyssa in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Increase in Deposits Increase in Required Reserves Increase in Loans (Dollars) (Dollars) (Dollars) First Main Street Bank Second Republic Bank Third Fidelity Bank Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $500,000 injection into the money supply results in an overall increase of in demand deposits.
Chapter19: Money Creation
Section: Chapter Questions
Problem 8SQ
Related questions
Question
![Now, suppose First Main Street Bank loans out all of its new excess reserves to Latasha, who immediately uses the funds to write a check to Jake.
Jake deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess
reserves to Tim, who writes a check to Rosa, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new
excess reserves to Alyssa in turn.
Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.
Increase in Deposits
Increase in Required Reserves
Increase in Loans
(Dollars)
(Dollars)
(Dollars)
First Main Street Bank
Second Republic Bank
Third Fidelity Bank
Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these
assumptions, the $500,000 injection into the money supply results in an overall increase of
in demand deposits.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffc10228f-3a2e-4a24-9e76-51af60998a9e%2F06fc197c-0c50-4f07-821b-380e7d832aa7%2Fynxfexq_processed.png&w=3840&q=75)
Transcribed Image Text:Now, suppose First Main Street Bank loans out all of its new excess reserves to Latasha, who immediately uses the funds to write a check to Jake.
Jake deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess
reserves to Tim, who writes a check to Rosa, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new
excess reserves to Alyssa in turn.
Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar.
Increase in Deposits
Increase in Required Reserves
Increase in Loans
(Dollars)
(Dollars)
(Dollars)
First Main Street Bank
Second Republic Bank
Third Fidelity Bank
Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these
assumptions, the $500,000 injection into the money supply results in an overall increase of
in demand deposits.
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